Egypt's Qalaa Holding eyes $560 million capital boost

Egypt's Qalaa Holding is considering a share issue worth some 4 billion pounds ($560 million) as part of efforts to tighten control of its core investments and end years of losses, sources with knowledge of the deal said.

The non-cash transaction would involve exchanging shares in the holding company for larger stakes in the firms in which Qalaa has invested. If successful, the move would take Qalaa's capital from 8 billion to 12 billion pounds, one source said.

The share swap comes when confidence in the Egyptian economy and stock market is growing after three years of turmoil in the aftermath of the 2011 uprising that toppled Hosni Mubarak.

The final figure for the capital increase has yet to be confirmed as the transaction has not been finalised. The company, which has moved from being a private equity firm to an investment holding structure, boosted its capital by about $530 million in Oct. 2013.

"It is a capital increase but it is a capital increase that is non-dilutive," said the source, who spoke on condition of anonymity. "The proceeds will be reinvested in proven winners and in reducing debt at the holding level."

A Qalaa spokeswoman declined comment.